Can An Employer Run Your Credit Or Check Your Credit Report?

If you’re applying for a job, you may find that a prospective employer wants to run a credit check on you. But can they do that legally? What does the law say about whether and when an employer can run a credit check on you?

Your Credit Can be Checked-Sometimes

An employer can, legally, run your credit and use your credit as a determining factor in whether or not to hire you. An employer cannot, however, ask that a current employee submit to a credit check as a condition of continued employment, or fire you for refusing a credit check, once you are already working with the employer.

Just because an employer can run your credit as a condition to hiring you, doesn’t mean that the employer can do what it wants—to run your credit, the employer has to follow set rules and guidelines. These laws are established by what is known as the Fair Credit Reporting Act, which addresses credit in employee-employer relationships.

Getting Consent in Writing

The prospective employer must get your permission, in writing, to pull your credit. This permission must be in a separate document, informing you that your credit will be pulled—it cannot be buried in another contract, or part of a larger document. The disclosure must also tell you that the employer may not hire you, based on anything that is revealed in the credit report that it pulls.

If you refuse to give permission to have your credit pulled, the employer can refuse to hire you. However, if the employer does not get your permission, and pulls your credit, you could have a lawsuit against the company.

Be aware that just because you give consent, doesn’t mean that the employer has to pull your credit at any point; your consent is technically good for however long it takes the employer to pull your credit. However, every credit pull (in the event the employer wants to pull your credit more than once) needs a separate authorization.

What if You are Denied Employment?

If the employer opts not to hire you because of something it finds in your credit report, you cannot sue the employer (however, you may have a claim against a creditor, or the credit reporting agencies, if information on the credit report is false, misleading, old, or not legally allowed to be on your credit report).

The employer must tell you, in writing, that it refused to hire you because of something that was on your credit. In addition to this notice, you must be given, by the prospective employer, a copy of the credit report that it reviewed in making its decision.

If you have something on your credit report that you know in advance may be a problem, it may be best to discuss it with your employer in advance, so that it knows what to expect, and it gives you the chance to explain away anything on your report that you are concerned may be problematic.

Contact the San Jose employment law lawyers at the Costanzo Law Firm today for questions about hiring or firing in the workplace that you feel may have violated your rights.

Source:

ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act